Sandstone AI raises $10M seed led by Sequoia to centralize legal data and automate in-house workflows

go and do this in your local put that next to your CrossFit gym. Anyway, next up we have our Lambda Lightning round.

Nick from Sandstone is the co-founder and CEO. He's in the reream waiting room.

Get that gong ready.

And now he's in the TVP and [music] Ultra. Nick, how are you doing?

What's happening? Let's get the gong going. How much did you raise? What's going on?

We're announcing our $10 million seed round.

There you go. A humble 10 a humble

humble mango seed. We love to see it.

Million.

Real question. 10. You versus 10 humanoid robots. Do you think you could beat them up?

I I don't think so.

Okay.

Um but

you're the same young. We all we we all need those robots in our in our life. We're going to get them in the office as soon as we can. And I think that's your first round to to come work at Sandstone is you actually have to fight off the robots to get into the office.

There you go. That's a good qualifier.

You're you're you're building AI for in-house legal teams. I imagine if the humanoid robots get deployed and they start harassing people, the in-house legal teams will be

it's deploying our market. Huge for our market. Yeah.

Uh but this is something we've actually been excited about. We've been we've been wondering uh where legal AI will land. There's obviously companies they're selling to large firms. You can do some stuff in the apps by yourself, but that feels a little bit risky. Sometimes the the the the chat apps will push back on you. Hey, I'm not a lawyer. I don't want to give you this type of advice. And maybe you don't want to upload your employment agreement to an app that will ultimately train on it, maybe leak your information at some point. So, how are you thinking about building the product, the go to market, um the the the value prop in a world where the other platforms exist and there are some DIY options?

Yeah, I mean the

first of all, thanks for having me, guys. It's great to be here. I think the

the the way that we've thought about approaching the in-house market is really from sort of two pain points that we saw and I saw this when I was serving legal teams at McKenzie and as an engineer. [clears throat] in-house teams have a ton of requests that come in from the business, from external users. They're basically getting bombarded with emails and Slacks and Teams messages, right? And they don't have a single platform in the same way that you know we have Linear or Jira um if you were an engineer 10 years ago um to to manage your work and who's doing what. Um and so that that's not even yet an AI problem, but rather a data problem. And so that was the first thing that we wanted to solve which was like can we sit across all these systems that lawyers have to deal with and pull in all the requests into one place so that when the AI you know goes to redline the agreement or answer the question or draft the contract it already has context on you know the entire thread that you're working on as well as all your other business systems. So, one of the issues with, you know, whether it's Claude or or ChatGBT or even some of the legal solutions out there is, you know, I open a contract and I ask for it to be reviewed, but if it's a sales agreement, I need to know like, you know, have we worked with this company before? Is it high ACV? How does it compare to our other deals in Salesforce? Does the seller have a good relationship? Right? These kinds of things are like what the lawyer actually goes and like they spend admin time doing to go gather that information. We want to be the context layer that pulls that all in. So when you go open that

ticket in your system in sandstone which has the sales agreement all that context is there and ready for you.

So how do you pull in all that data? Are you a big like Zappier customer and you're integrating with everything on day one? Are you writing MCP integrations, API integrations? Is it client by client and it's more hightouch because you're going with really big companies as starting uh customers and you go to their in-house legal team and if they're using some custom CRM, you'll build a custom CRM integration uh because it's important to them. Uh how do you go down the stack of integrations to get that full context?

Yeah. So mostly API integrations. I think there's some MCP that that we're working with. Um the the way that we think about it is being pretty opinionated about what data from your CRM or your ERP is important for legal workflows. And so we're able to, you know, on day one have the team come in, set up an integration, and then essentially tell us what are the, you know,

according to these critical fields that we need, where can we find them in your system? Right? Salesforce systems are very complex. And so we asked them, hey, here's, you know, the 10 things that we're going to need. where do these live within your salesforce so that we can much more easily query that going forward. This has allowed us to you know even for some you know 5 to 10 person legal teams we can onboard them within a week with multiple integrations and I think one of the things that's important is like this isn't going to be an overnight problem right no legal team is going to solve their data issue in in one night but if you can integrate even Google drive and maybe your contract management tool and Slack and that's 50 to 60% of your data that's going to change your you know ability to answer questions and get legal work done by you know several fold and then we can continue to integrate over time.

Yeah.

What are uh what's the mindset of your buyers? I think you know if you're if you're Harvey or one of these other legal AI players and you're selling into a law firm they're doing this dance right now where they're like we're going to make you way more efficient but uh we're all you know that there's this kind of the elephant in the room is like okay is this going to impact billables? But if I'm an in-house uh legal team uh that's not really on my mind. and I just want to deliver great work and and and protect the company and and uh keep the company compliant uh across a bunch of different dimensions. Uh I imagine there could be like more pull, more excitement, more kind of urgency uh to adopt than maybe some big law firm that's like, "Hey, we've done it this way for a long time and our business is doing great right now. Uh we don't need too much AI."

Yeah. Before I started Sandstone, the most of my work was at McKenzie helping big law firms think about AI and tech strategy. And we would actually go out and deploy AI solutions for some of these big firms. And I think the hardest thing was you have to go to every partner in every practice area as if it's its own business and kind of sell, you know, a one-off solution to them and get them on board with the fact that, hey, this might have some implications on your billable hour model going forward. Withinhouse, it's completely different, right? when when they see AI solutions that can take a lot of the admin work off their plate, generally the GC thinks, hey, now my team can go focus on being in more of the business strategy conversations and become more, you know, proactive around potential risks and issues within our company rather than, you know, reactive and trying to play catch-up on all the requests that we have coming in. I think this is like one of the bigger paradox, you know, paradoxes within legal and within AI more broadly, is like as legal teams get more efficient on the admin side and collecting the context, which we're working on, they're going to be able to be in more business discussions, protect the company from more risk, but also have more work ultimately. And so, you know, a lot of our legal teams, I anticipate they'll continue to grow as they adopt more AI, but they'll just do it in a more effective way for the business. And we'll see a world where like you know the top law firms in the future need to be AI native and AI enabled but I think the top legal teams in the future and even the top companies will have to have like these AI native legal teams. Um similar to how you know ramp I think if you're using ramp as a smaller company and your finance team is using it you're probably spending a little bit less on you know services that you typically might have on the the financial and accounting side. Um and it's also helping your business move faster. I think historically we didn't see that in finance. You see the same in HR with workday and so I think legal will will get there over time.

How's growth been?

Growth has been has been great. So we started working on this you know five months ago. Um we've got you know dozens of companies using it today. [laughter]

We got we got dozens of companies using it today. You know a mix of earlier smaller in-house teams all the way up to Fortune 500s. Um our team is

let's go. Let's give it up for the for the Fortune 500

for sure.

Um our team is uh you know a team of 15 engineers and lawyers in in New York and Brooklyn. Um one of our mantras is that everyone ships. So we have four lawyers on our team. Every single one of them codes. Um three of them are actual full-time engineers. My my co-founder was a lawyer. He became an engineer.

We have a general counsel who became a software engineer for 5 years. Um and you know they're shipping every day. And and so that's sort of how we want to build this. We want to build this like a tech company would build today. Um and everyone [clears throat] has some sort of a legal background or engineering background. Um and whether you you have that from your experience or it's it's something that you've learned by by being at Sandstone.

Well, congratulations on the round. Congratulations on the progress so much such a short amount of time. Congratulations. Fantastic.

Yeah. Very very cool. I'm sure I'm sure you'll be back on this quarter. That's my That's my bet. That's my bet. and

uh great great to meet you and uh good luck out there. We'll talk to you soon.

Talk to you soon.

The rest of your day. Goodbye.

Up next, we have Rob Slaughter of Defense Unicorns. You got to check his website out. It's fantastic.

Intense name, very cute uh for himself.